Question

Perez Company reported the following operating results for two consecutive years: Required Compute each income statement component for each of the two years as a percent of sales. (Percentages may not add exactly due to rounding. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).) Percentage of Sales Sales Cost of goods sold Gross margin on sales Operating expenses Income before taxes Income taxes Net income PEREZ COMPANY Vertical Analysis of Income Statements 2019 Percentage of 2018 Sales 1,005,000 % $ 1,081,500 552,750 599,200 452,250 482,300 129,900 150,000 322,350 332,300 81,000 83,000 $ 241,350 % $ 249,300 70

Answer 1

	2019	% of sales	2018	% of sales
Sales	1,005,000	100%	1,081,500	100%
Cost of goods sold	552750	(552750/1,005,000)=55%	599200	(599200/1,081,500)=55.4%(Approx)
Gross margin on sales	452250	(452250/1,005,000)=45%	482300	(482300/1,081,500)=44.6%(Approx)
Operating expenses	129900	(129900/1,005,000)=12.9%(Approx)	150,000	(150,000/1,081,500)=13.9%(Approx).
Income before taxes	322350	(322350/1,005,000)=32.1%(Approx)	332300	(332300/1,081,500)=30.7%(Approx).
Income taxes	81000	(81000/1,005,000)=8.1%(Approx).	83000	(83000/1,081,500)=7.7%(Approx).
Net income	241350	(241350/1,005,000)=24%(Approx)	249300	(249300/1,081,500)=23.1%(Approx).